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St. Johns University School of Law
Kniffen, Margaret N.

Contracts I
Fall 1999 Professor Kniffin
Daniel B. O’Sullivan

I. The Basis for Enforcing Promises
(b) Injury to person or property as a result of a breach of warranty (implied or explicit).
A. The Meaning of “Enforce”
1. Purpose of Relief
2. Relief
a) Contract law aims to compensate, not to punish.
b) Although we don’t want to encourage breaches,
c) The free market system and the legal system work better when people are allowed to breach.
(1) When breach is in the best interest of society
(2) When breach is in the interest of the market.
a) Economics of Remedies
(1) Everything has a price tag versus intangible “expenses”
(2) Two types of theories:
(a) Descriptive Relief
(i) Use economics to describe what will provide justice.
(ii) Justice is the most important principle.
(b) Prescriptive Relief
(i) Use economics without regard to specific p and D.
(ii) Economics dominates concerns.
b) Money damages
(1) The usual form of relief
(2) Usually money damages are in the form of expectation damages.
(3) Pain and suffering or punitive damages are not, generally, awarded in contract cases.
c) Specific Performance
(1) Uncommon
(2) Requirements
(3) Clean Hands Doctrine:
(4) UCC §2-716 is the governing provision.
B. Types of Money Damages
1. Reliance
2. Compensatory or Expectation Damages (UCC §2-710 – §2-715)
a) Out of Pocket Expenses
(1) Money spent by p in expectation of a valid contract.
(2) Puts p where p was before contract was formed.
b) Restitution
(1) Unjust enrichment of the D
(2) Money paid by the p to the D
a) Cover (UCC §2-712)
(1) Requirements
(2) Rule
(a) Buyer may recover the difference between the cost of cover and the contract price and
(b) Any incidental or consequential damages (UCC §2-715)
(c) Less expenses saved as a consequence of the seller’s breach.
(a) Good faith effort
(b) Without unreasonable delay
(c) Purchased goods in substitution
b) No Cover (UCC §2-713)
(1) When Buyer chooses not to purchase substitute goods.
(2) Rule
(a) Di

quately calculate damages.
(b) Specific Performance will not require too much interference or oversight from the courts.
(c) Contract clearly describes performance required.
(i) Clear and unambiguous decree from the court.
(ii) D is subject to contempt of court for failure to comply. Need a means to ensure D can comply.
(d) Court will not force antagonistic parties to cooperate.
(a) The judgement puts the p where the expected to be at the completion of the contract.
(b) Legal fees are not compensated for in breach.
(a) A person invents a medical device.
(b) Contracts with a company to be the sole manufacturer.
(c) They don’t have adequate resources to effectively market the device.
(d) Inventor breaches to make the product more readily available to the public.
St. John’s University School of Law